Payment Banks: A Bank That Accepts But Doesn't Offer

The government introduced this new concept of payment bank that doesn’t operate like normal banks. It only accepts money and does all other banking task but doesn’t lend money or involve any credit risk. It doesn’t offer loans and issue credit cards that differentiates payment bank from other banks.

Services offered at payment bank

  • Accept deposit up to one lakh
  • Remittance service
  • Issue debit cards
  • Open account
  • Mobile payments
  • Fund transfer
  • Shopping payments
  • Activate net banking

How it came into existence?

Based on a research conducted in the year 2013 on comprehensive financial services for low income households and small businesses that aimed for financial services and reaching to masses who do not avail such services. In the report submitted to RBI in 2014, the idea of small banks or payment banks was presented to make Indians globally upgraded where every Indian must have a bank account. The only reason to take this initiative is to outreach the small business, low earning group and workforce like labour and make them reach the level of awareness where they feel the need to update themselves in this fast technologically driven society. This initiative aims to reach the remote areas to make people avail the services and make the best use at the same time update themselves on the technology.

Objectives of payment bank

  • To cater to the unbanked and underbanked section
  • To open an account for every individual
  • Make the people aware of the digital financial system
  • Reach the remotest areas
  • Make the Indian population financially inclusive
  • Upgrade every citizen on technology
  • Make everyone digitally sound
  • Secure payment gateway
  • Change the face if Indian economy

Authorised companies to run as payment bank

Bharti airtel India Post payment Bank Paytm
Vodafone m-pesa Tech Mahindra Ltd Reliance industries Ltd

*There are several others companies that have got the payment bank license but have not been mentioned here.


  • Cash deposit up to 1 lakh
  • Minimal transaction fee
  • No lending services
  • High interest rates ranging from 4%-7%


  • It provides a secured gateway of payments for all transactions.
  • It caters to the unreachable section of society, the ones who are underbanked, do not hold an account or to the migrant workers, labourers, etc.
  • It is easy as it provides most of the services over mobile phones, therefore, it is user-friendly.
  • It aims to eliminate black money and encourage digitisation by making cashless transactions.
  • Going cashless also minimise the expenses of generating new notes and exchange the old ones.
  • With the secured payment gateway, there are chances to reduce risk of fraud.


Keeping in mind to promote this initiative and fulfilling the aim to make it spread widely, Prime Minister Narendra Modi launched India Post Payment Bank on Sept 1, 2018 to make the banking services easy for the underbanked section.


Regular savings account: It is a zero balance account with no monthly average maintenance. Anyone above 10 years with KYC can open the account. You can make multiple withdrawals or deposits in this account. This account can have maximum deposit of one lakh only. You can avail the door step services wherein the postman will come to your place to assist you with the non-cash services. Contact the centre @ 155299, book an appointment, get message confirmation, show your QR card or account number or mobile number to avail the services.

QR code: Instead of cheque book for your account in IPPB, you receive a QR card with which you can carry out transactions. You do not require your account number or pin. There is biometric verification for processing any transaction. The place where you wish to make transaction must be equipped with the machine that can scan and accept this QR code. Your transactions will be authenticated with the biometrics.

Basic savings account: This account is also similar to the regular savings account in which transactions can be carried out with the help of QR code. The only difference it has is that it allows only four cash withdrawals in a month.

Digital savings account: You can open this digital account from the mobile app of IPPB. Anyone having an aadhar card and PAN card and is above 18 years of age. This account doesn’t have QR card, you can have a deposit of 2 lakh and make immediate fund transfers. To make unlimited transactions, you need get the account converted to regular savings account by visiting the IPPB branch.

Payments banks have been introduced in order to make the population go cashless, paperless and make digital transactions. The main aim to come up with this initiative is to cater to the underbanked section, migrant workers, labours and the people who do not own a bank account. We should opt for such services as they provide us a secured payment platform and also helps us save some money for our future needs.

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